Home > For-profit tactics might be coming to public universities, and no one is talking about it

For-profit tactics might be coming to public universities, and no one is talking about it

Sarah Wasko / Media Matters

Unless you’re a resident of Indiana, you probably haven’t heard about Purdue University’s recently announced acquisition of troubled online for-profit college Kaplan University. This acquisition is highly unusual and has many unknown implications for Indiana students and educators and beyond -- and media’s limited and uncritical coverage of the unprecedented merger is exactly what the leadership behind the deal wants.

On April 27, Purdue University announced[1] the deal to acquire Kaplan University, in a first-of-its-kind[2] move to bring a for-profit college under the umbrella of a public university. Many details of the deal remain unclear, including whether the unnamed new university will operate more like a for-profit[3] or a public college. Purdue issued a press release stating[1] that “the creation of a new public university ... will further expand access to higher education.” Purdue President and former Indiana Gov. Mitch Daniels said in the same press release that he wants “Purdue be positioned to be a leader “ in online education.

Daniels’ rhetoric mirrors common right-wing media defenses[4] of “innovative[3]” (actually troubled) for-profit institutions that take advantage of students[5] and often underserve[6] communities that need accessible higher education most. Kaplan’s track record is no different.

Kaplan’s troubling history

Kaplan University is among many high-profile institutions in the for-profit online college industry that have been investigated for troubling practices[7] that hurt students. In an April 30 article in The Chronicle of Higher Education, for-profit college accountability expert Robert Shireman wrote[8] that “a U.S. Senate committee investigation revealed that Kaplan in 2009 allocated more money to marketing … than to actually teaching students”:

Kaplan’s sales operation trained recruiters to steer prospects away from comparing Kaplan’s programs to other options by using a "fear, uncertainty and doubt" strategy aimed at getting prospects to enroll right away. A U.S. Senate committee investigation revealed that Kaplan in 2009 allocated more money to marketing and profit than to actually teaching students. The recruitment process was designed to get students to sign enrollment contracts — complete with clauses denying them the ability to go to court if there was a dispute — before they even spoke to financial-aid counselors about the details of financing the degree.

[...]

Kaplan tripled its enrollment between 2003 and 2010, mostly by signing up older students who would qualify for the maximum amount of federal student loans. In an industry already known for poor student outcomes, Kaplan’s tactics gave it among the worst withdrawal rates and loan-default rates of the 30 companies investigated by the Senate committee. In several majors at Kaplan, far more former students ended up defaulting on their loans than earned degrees.

In addition to the federal investigation, Kaplan has been or is currently under investigation in at least six states. Kaplan has settled lawsuits[9] for using misleading advertising in Massachusetts and employing unqualified instructors in Texas.

Enrollment has steeply dropped[14] across the for-profit college sector in recent years. As Fortune magazine’s Kaitlin Mulhere wrote[15], Kaplan University’s “enrollment fell 22% in 2016 and its revenue is down 40% from 2014, according to an annual report from Graham Holdings, which own[ed] Kaplan.” Kaplan’s rapidly declining business and dings to the for-profit industry’s reputation across the board mean that the Purdue deal is a timely opportunity for the troubled Kaplan University to reinvent itself.

And the marriage of Purdue and Kaplan also raises the possibility that the problematic behaviors of online for-profit colleges will be introduced into public universities.

Purdue-Kaplan merger was announced with little community input

A second aspect of the Purdue-Kaplan merger that ought to raise red flags for journalists is the manner in which the deal was developed and announced, and the lack of accountability built into it.

Purdue’s faculty members say they were not informed[16] of the merger until an hour before the acquisition was announced, a misstep that angered many who viewed the lack of consultation as a violation of shared governance. The Purdue faculty senate has voted[17] against the deal, calling on Daniels and the board of trustees to rescind it, although Daniels asserts[18] that the senate does not “dictate” matters pertaining to the new university.

Steve Schultz, Purdue’s legal counsel, said the [public records] exemptions were put into the bill intentionally to be clear that the new online university will be a different animal that Purdue and its regional campuses.

First, Schultz said, it won’t receive state money. And second, the New U will operate more like a nonprofit corporation and will not, he said, “meet the definition of a ‘public agency’” under state open records or open meetings laws.

Local print media covered the story critically, but few national outlets did

Since the Purdue-Kaplan acquisition was first announced, major national broadcast and print outlets have largely stayed silent on the deal. And when some media outlets have covered the story, they’ve largely failed to mention Kaplan’s troubled history with high student loan default rates, low graduation rates, and federal and state investigations into its problematic practices, as well as the transparency issues that plagued the deal.

Database searches of transcripts from major broadcast networks -- ABC, CBS, and NBC -- and cable news networks -- CNN, MSNBC, and Fox News -- found no mention of the Purdue-Kaplan merger for 23 days, despite the important implications it has for higher education beyond Indiana. On May 20, Fox provided the first national television coverage of the Purdue-Kaplan deal. Daniels gave a seven-minute interview to Paul Gigot on America’s News Headquarters. The segment briefly mentioned faculty dissatisfaction with how the deal was negotiated. There was no reference to Kaplan’s problematic history or the lack of transparency around the deal.

Among five major national newspapers -- The New York Times, USA Today, Los Angeles Times,The Wall Street Journal, and The Washington Post -- only the Post and the Journal covered the deal. The Post published one article[22] that discussed the state and federal investigations of Kaplan. The Journal published three[23]news[24] stories[25] and one op-ed[26] about the deal. Between these four pieces, the Journal made no mention of the federal and state investigations into Kaplan, but two pieces discussed faculty complaints about being excluded from the decision-making process (one of them just passingly) .

Local Indiana broadcast outlets ran 41 total segments about the Purdue-Kaplan merger on 11 different local stations of CBS, Fox, ABC, and NBC outlets in the Lafayette, Indianapolis, Fort Wayne, and Terre Haute markets. None of these segments discussed Kaplan’s history of student loan defaults, its low graduation rates, its open records issue, or the federal investigations into its practices.

Indiana print outlets have published by far the most critical and comprehensive coverage of the Purdue-Kaplan deal, though they still failed to provide important context in some instances. Lafayette’s Journal & Courier has provided[27] the majority [28]of analysis [29]on the deal[30], some of which was also featured in The Indianapolis Star[31] and Evansville Courier & Press[32]. The South Bend Tribune[33] also reported on the merger. In all, 12 stories were written in seven local Indiana newspapers on the Purdue-Kaplan deal, six of which were reprinted in other local newspapers. Most -- though not all -- of these stories mentioned Kaplan’s problematic history and the merger’s transparency problems. Of the 12 articles, four discussed state and federal Kaplan investigations and six mentioned the lack of faculty input on the deal. Four articles mentioned Kaplan’s record on high student debt loads and default rates and just two touched on Kaplan’s low graduation rates. More than a third of the local articles discussed the open records exemptions for the new university.

More comprehensive media coverage of the Purdue-Kaplan deal and other efforts to privatize public education would be in the public interest. Local communities should be informed about education matters like the Purdue-Kaplan deal that utilize taxpayer money in potentially harmful ways, and they should have a say in whether they want their public institutions to be privatized. Because the deal has not cleared all regulatory hurdles, local and national media still have an opportunity to dig deeper into this story in the coming weeks and months.

Methodology

Media Matters searched Nexis news program transcripts for CNN, MSNBC, Fox News, ABC, CBS, and NBC for all mentions of “Purdue” and “Kaplan” from April 27 through May 18. Nexis transcripts include all-day programming at CNN; programming from 5-11 p.m. on MSNBC and Fox News; and morning, evening, and Sunday show news programming on ABC, CBS, and NBC. Media Matters also used video databases Snapstream and iQ media to search for transcript mentions of “Purdue” and “Kaplan” on MSNBC and Fox News programs that are not included in Nexis, and on local broadcast news programs in the Indiana media market.